Please show your work. Thank you! Bobby purchases equipment with cost of $60,000
ID: 2497206 • Letter: P
Question
Please show your work. Thank you!
Bobby purchases equipment with cost of $60,000, salvage value of $4,000 and life of 4 years. Create a STRAIGHT LINEDEPRECIATION SCHEDULE.
Year
Depr. Cost
Rate
Depr. Expense
Acc. Depr.
Book Value
1
2
3
4
Use the same cost, SV and life for a depreciation schedule using the DOUBLE DECLINING BALANCE method. Cost=$60,000, SV= $4,000, Life=4 years.
Year
BV Beg. of Yr.
Rate
Depr. Expense
Acc. Depr.
Book Value, End of Year
1
2
3
4
Present Value Concepts-- Fill in the table with the correct values. Show your formulas.
PV of $1
PV of Annuity of $1
Periods 11%
Periods 11%
1
1
2
2
3
3
Future Value Problem
Roni invests $7,000 today in a project that earns 8% per year. How much will Roni’s investment grow to in 4 years? Show your formula. _________________________
Present Value of a Stream of Unequal Cash Flows
Fred is looking at a project with the following cash flows:
0
1
2
3
$10,000
$15,000
$20,000
PV = $_________
Can you calculate the present value of this stream of unequal cash flows, using a discount rate of 10%? OK to use a present value table for this one. Show your formula.
Year
Depr. Cost
Rate
Depr. Expense
Acc. Depr.
Book Value
1
2
3
4
Explanation / Answer
=60000-4000 =56000
56000/4 =14000
Year Depr. Cost Rate Depr. Expense Acc. Depr. Book Value 1 56000 0.25 14000 14000 42000 2 56000 0.25 14000 28000 28000 3 56000 0.25 14000 42000 14000 4 56000 0.25 14000 56000 0